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3rd Cir. – Post-Retirement Employment Disqualification

05-08-2018, 10:54 AM

Here’s a new case out of the Third Circuit entitled John D. Bickhart v. Carpenters Health and Welfare Fund of Philadelphia and Vicinity, et al. In this matter, the plaintiff was receiving his retirement, but working in other jobs against the rules of the retirement plan. I won’t dwell too much on the facts considering the court issues a pretty short opinion, but the Third Circuit sets forth a pretty blistering opinion ruling against the plaintiff.

Bickhart raises two primary and nearly a dozen supplementary arguments against the Board’s decision, but to no avail. First, Bickhart argues that Tonia, rather than the Board, made the decision to terminate his benefits. This conflates Tonia’s initial determination with the final decision rendered by the Board. When considering a benefits determination under ERISA, we focus on the final, post-appeal decision. Second, Bickhart argues that the Board’s decision is not entitled to any deference because both Tonia and the Board relied on the pre-2009 version of Section 3.04, so neither determination was based on the current plan language. Setting aside the question of which version of Section 3.04 should apply in this case, it is sufficient to note that the Board applied the language that is unquestionably more favorable to Bickhart in reaching its determination. Any error, therefore, was less than harmless.

Following these two arguments, Bickhart launches a fusillade of “due process” objections to the Board’s decision. These arguments (eleven in total) range from the petty to the absurd, e.g., that the Board failed to provide the basis for its decision, that the Board failed to conduct a thorough investigation, and that the Board failed to articulate the precise details of the disqualifying work performed by Bickhart. When a benefits determination is supported by “an abundance of evidence,” even “procedural irregularities” in the decision-making process cannot normally render an administrator’s decision arbitrary and capricious. Here, Bickhart has not demonstrated any such irregularities, but even assuming such a showing, the abundance of evidence in this case—starting with his own admissions—would still foreclose a finding that the Board’s decision was arbitrary and capricious.

The court also finds that ERISA permits a case-by-case benefits determination so long as the plan documents make this feature clear. Unfortunately for the plaintiff, he did not avail himself of that process.

ERISA requires covered plans to “specify the basis on which payments are made to and from the plan.” Bickhart claims that Section 3.04 is fatally ambiguous—thus violating the specificity requirement—because it permits waivers of the work prohibition for, in Bickhart’s view, “broadly characterized and undefined reasons.” Section 3.04(f) provides, in part, that “[t]he Board of Administration, or one or more members on their behalf, may waive the work rules on termination on the basis of labor need or other considerations relevant to the purposes of the termination rules.” That this provision contemplates discretion in the approval of waivers raises no concerns under ERISA. We have consistently held that ERISA permits case-by-case benefits determinations so long as the plan documents make this feature clear.18 But more importantly, neither Section 3.04(f)’s specificity nor its practical implementation are remotely relevant to Bickhart’s case because he never so much as requested a waiver in the seven years that preceded the termination of his benefits, during which time he was actively employed in the construction industry. The terms of the plan make clear—and pellucidly so—that, absent a waiver, the work Bickhart engaged in (confessedly and perennially) would result in forfeiture of his benefits. At the very least, therefore, the terms of the plan satisfy ERISA’s specificity requirement as applied to Bickhart.